Sam Dastyari (NSW, Australian Labor Party) Share this | Hansard source

I move the amendment standing in the name of Senator Conroy:

(1) Page 25 (after line 29), after Schedule 3, insert:

Schedule 3A—Finance

Public Governance, Performance and Accountability Act 2013

1 At the end of Division 2 of Part 4 -1A

Add:

105BA Future submarine project tender process

(1) This section applies if the Commonwealth (including a Minister on behalf of the Commonwealth) proposes to enter into a contract (a submarine design and building contract) for the design and building of a submarine, or a substantial part of a submarine, as part of the future submarine project.

Note 1: The future submarine project is designated SEA 1000 in the Defence Capability Plan as in force on 1 December 2014.

Note 2: This section does not apply to contracts for research, concept or preliminary design, planning or other preparatory work that does not involve the building of a submarine or a substantial part of a submarine.

(2) The submarine design and building contract must not be entered into other than as the result of a limited tender process conducted in accordance with the Defence Procurement Policy Manual as in force on 1 December 2014, subject to this section.

Tender process

(3) At least 4 bidders must be invited to participate in the limited tender.

(4) The future submarine project is taken not to be an exempt procurement for the purposes of the Defence Procurement Policy Manual.

(5) A request for tender must invite the bidders to give the Commonwealth a project definition study and preliminary design that meets top level requirements specified by the Commonwealth, sufficient to allow mainly fixed pricing and 10 vessel years of post-commissioning integrated logistics support.

(6) The Commonwealth must consider the Australian Industry Capability Program, the Defence and Industry Policy Statement and the impact on the strategically vital Australian submarine and shipbuilding industry when deciding whether to enter into a submarine building design and contract in relation to the future submarine project.

(7) This section ceases to have effect at the end of 30 June 2020.

We are finally here to talk about the substance of this Omnibus Repeal Day (Spring 2014) Bill and the substance of this matter. A lot of people in this chamber have tried to turn this into a debate about process, into a debate about procedure. That is not what we are here to discuss and that should not be what we are to discuss. What we are here to discuss is a bill that will include a provision to allow a proper open and fair process for the tendering of Australian shipbuilding.

The Senate Economics References Committee, of which I am fortunate enough to be chair, has gone through a lengthy, detailed process to look at the substance of the issues at hand. Any close evaluation of the substance, of the heart, of the matter demonstrates that there is no capability problem, there is no military argument and there is no economic argument why you cannot have a fair and open tender process within the necessary time to make sure that we can have a proper Australian build. All we are asking for in this process is to give the Australian firms a fair go, a fair chance and an opportunity equal to that provided to others. We are asking for a competitive, market-based approach. I urge crossbench senators—I note there are two of them here—to look at the substance of what we are here to discuss. We are saying we want an open tender process for the allocation of Australian shipbuilding contracts. We are not asking for favouritism for an Australian firm, we are not asking for any benefits, but for those of us who believe that the best outcome will also be determined when there is a more open, more competitive tender process, this is the path to achieve that. I acknowledge Senator Edwards, on the other side, the deputy chair of the Senate Economics References Committee, who not only has made a fantastic contribution in this debate but also has had the guts, the decency and the honesty to call things as they are and say, hang on, we need to have this open process, we need to have this tender process, we need to make sure that ASC and other Australian firms are allowed to compete in this process. I acknowledge the comments of Senator Ruston, Senator Birmingham and Senator Fawcett, who unfortunately is not with us here today to participate in this debate.

The need for a competitive tender is clear. In the process that the Senate Economics References Committee went through, witness after witness gave emphatic and overwhelming support for the government conducting a competitive process before choosing Australia's future submarine. Witnesses agreed that decisive action must be taken to start the tender process but insisted that there was time for a competitive process where all proposals for tenders could be tested and their claims validated. I quote Dr John White, the person responsible for the government's own report on these matters—a report the government refuses to make public. He said:

There are significant technical, commercial and capability gap risks invoked by prematurely and unilaterally committing to a preferred overseas, sole-source supplier.

Why? Because without an open, transparent and internationally competitive tender process Australian taxpayers cannot be sure they are getting the value for money they should be. I quote Professor Goran Roos, who has said:

If the Government were to make it known that it was sole-sourcing a contract … it would place that Government in a negotiating position where it would be difficult, if not impossible, to get a good deal on both price and terms and conditions. This would de facto expose Australia to an unacceptable level of risk in the national security domain …

Why? Because a decision to have a tender process where only one or two companies are allowed to compete by its nature denies the opportunity to negotiate. There are those on the other side of the chamber, and there are those out there in the community, who have argued Australian firms are not up to it, who have argued Australian firms do not have what it takes. That is an argument that has been comprehensively rejected. Frankly, if that is what some people believe, then have an open tender process, have an open opportunity to hear the arguments, have a fair and transparent system where those people can put their case and their case can be tested. The bulk of the government's argument to date as to why it has not yet gone down this path of an open and transparent tender process is that there is some kind of a capability gap, that there somehow is not enough time. That is a case that has been comprehensively rejected. I quote again Dr John White, who is an expert on these matters:

There is still sufficient time available, with adequate contingency, for the competitive PDS to be carried out and to build the Future Submarines in Australia.

So there is no capability reason why this cannot happen—there is no capability case. There may be a case where the Australian firms are not the best firms to build the submarines, there may be a case where they lose the tender, but those on this side of the chamber are not arguing for an unfair advantage—we are arguing for a fair and transparent tender process. I quote Commodore Paul Greenfield, retired:

There does not have to be a capability gap if we get on with it now.

I also quote Rear Admiral Peter Briggs, who said:

Our strong recommendation is that we get bids from all four potential contenders and make a sensible, informed choice at that point and that we get on with it, because the clock is running.